HYPOTHESIS AND THEORY article
Front. Sustain.
Sec. Sustainable Organizations
Can Carbon Emissions Trading Pilot Policy Improve Corporate ESG Performance? — Empirical Evidence from China
Provisionally accepted
- School of Business Administration, China University of Petroleum-Beijing at Karamay, Karamay, China
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As one of the key policies driving low-carbon transformation, the carbon emissions trading pilot policy is not only an effective market-based approach to reducing emissions, but also a vital tool for enhancing firms' comprehensive performance in environmental, social, and governance (ESG) dimensions.This study utilizes data from Chinese A-share listed companies from 2009 to 2021. A multi-period Difference-in-Differences (DID) model is employed, with firms' green technological innovation capability as a mediating variable, and media attention and intellectual property protection as moderating variables.It explores the specific impacts and mechanisms through which the carbon emissions trading pilot policy affects corporate ESG performance, in order to assess whether low-carbon transformation can enhance ESG performance.The results reveal that: (1) The carbon emissions trading pilot policy has a significant positive effect on corporate ESG performance. This finding remains robust across various tests.(2) The policy stimulates firms to strengthen their green technological innovation capability, which in turn enhances their ESG performance. Moreover, media attention and stronger intellectual property protection positively moderate green innovation capability, indirectly amplifying the policy's positive impact on ESG performance.(3) The policy's effect on ESG performance is more pronounced in firms from non-heavily polluting industries, non-high-tech sectors, and regions with lower fiscal revenues. These findings offer valuable policy implications for promoting ESG performance through low-carbon transition, using emissions trading as a regulatory instrument.
Keywords: carbon emissions trading, ESG performance, Difference-in-differences, quasi-natural experiment, Environment regulation
Received: 09 Jun 2025; Accepted: 18 Nov 2025.
Copyright: © 2025 Du, Wang, Zhang, Zhang and Liu. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
* Correspondence: Jiayi Wang, 2022016652@st.cupk.edu.cn
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